EURJPY recently broke below support around the 124.50 minor psychological mark and fell to a low of 120.71 before pulling up. A retest of the broken support may be in order, and it could hold as a ceiling this time.

Applying the Fib tool on the latest swing high and low shows that the 61.8% level lines up with this area of interest and might be the line in the sand for this pullback. A shallow correction could hit a ceiling at the 38.2% level or the 123.00 major psychological mark.

The 100 SMA is below the longer-term 200 SMA to indicate that the path of least resistance is to the downside. In other words, the selloff is more likely to gain traction than to reverse. There seems to be no imminent bullish crossover either.

RSI is on the move up but is just reaching the overbought zone to signal exhaustion among buyers. Turning lower could signal that sellers are taking over while buyers take a break. Similarly stochastic has made it to the overbought zone to indicate that bullish momentum is exhausted.

The euro was able to regain its legs after a relatively upbeat ECB decision as the central bank expressed its bias to keep rates on hold until the middle of next year. Meanwhile, the yen lost ground as risk appetite picked up on easing trade tensions between the US and Mexico, as well as global easing expectations.

There are no major reports due from the euro zone this week, with ECB head Draghi’s speech being the only top-tier catalyst scheduled. With that, EURJPY could take its cue from overall market sentiment as the Japanese economy also has an empty economic calendar. Resurfacing trade tensions between the US and China could ramp up demand for the safe-haven currency.